UPDATED July 30, 2015, with details on Justice Dept. probe.
NuVasive Inc. (NSDQ:NUVA) posted 2nd-quarter earnings that topped expectations on Wall Street and closed out its $14 million settlement with the U.S. Justice Dept.
San Diego-based NuVasive reported profits of $10.3 million, or 20¢ per share, on sales of $202.9 million for the 3 months ended June 30, marking a swing to profits from losses of -$4.1 million and 6.4% sales growth, compared with Q2 2014.
Adjusted to exclude 1-time items, earnings per share were 31¢, a full 6¢ ahead of expectations on The Street.
“We are pleased to report another strong quarter that resulted in revenue growth of more than 8% and an impressive 460 basis point increase in profitability, as we continued to take market share and gain momentum in our efforts to improve operational efficiencies,” chairman & CEO Gregory Lucier said in prepared remarks. “We are laser-focused on increasing our market share by rapidly developing disruptive technologies and services for spine surgery, expanding our global footprint in existing and new markets, and positioning NuVasive as a commercial powerhouse with integrated sales, service and specialized customer marketing programs. With these efforts underway, we look to move even faster to drive NuVasive’s next phase of growth and success, while generating enhanced long-term value for our shareholders.”
NuVasive said it still expects full-year sales of $810 million but raised its 2015 earnings outlook to $1.18, up from prior guidance of $1.12 per share. Adjusted EPS are pegged at $1.17, up from prior guidance of $1.10.
The company also said it finalized a previously announced deal with the Justice Dept. NuVasive said in July 2013 that the U.S. Health & Human Services Dept.’s inspector general issued a subpoena “in connection with an investigation into possible false or otherwise improper claims submitted to Medicare and Medicaid” for documents from January 2007 through April 2013. In April the company said it agreed to pay $13.8 million to settle the probe.
NuVasive said July 28 that the final deal calls for it to pay $13.5 million, plus fees and accrued interest, but admit no wrongdoing in the case.
The Justice Dept. said yesterday that it accused the company of a marketing scheme to promote the off-label use of its CoRoent spinal fusion system in treating severe scoliosis and severe spondylolisthesis. The case stems from a qui tam whistleblower lawsuit filed by former NuVasive sales rep Kevin Ryan, who will receive roughly $2.2 million of the settlement, according to the DoJ.
Prosecutors also alleged that NuVasive “knowingly offered and paid illegal remuneration to certain physicians to induce them to use the CoRoent system in spine fusion surgeries” using speaker fees, honoraria and expenses relating to physicians’ attendance at events sponsored by a group known as the Society of Lateral Access Surgery.
“SOLAS was allegedly created, funded and operated solely by NuVasive, despite its outward appearance of independence,” according to the government.
